Firms hit by apprenticeship levy costs

Businesses remain in the dark about how to use the apprenticeship levy, 6 months after its introduction.

The British Chambers of Commerce (BCC) polled more than 1,400 businesses and found 23% of levy-paying firms have no understanding of the apprenticeship levy or how to respond to it.

As of 6 April 2017, businesses with an annual pay bill of more than £3 million must pay the levy towards apprenticeship funding. The levy is charged at 0.5% of the annual pay bill.  

Each employer receives an allowance of £15,000 to offset against their levy payment.

Businesses with an annual pay bill of less than £3 million can also apply for apprenticeship funding – but 66% of firms did not try to access it.

The apprenticeship levy represents an added cost for 56% of levy-paying businesses, who do not expect to recover all or a percentage of their costs from their £15,000 individual allowance. 

Jane Gratton, head of business environment and skills at the BCC, said:

“The apprenticeship levy can feel like an additional employment tax, much of which businesses are unable to recover, and one that is deflecting training budgets away from other important training needs.  

“Firms need greater flexibility on how they can use their levy payment and a system that is fully operational as quickly as possible, is simple and efficient, and enables them to access good quality training.”

Contact us to discuss funding options for apprentices.